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142 F.

3d 802
41 Fed.R.Serv.3d 70

The FIRST NATIONAL BANK OF DURANT, PlaintiffAppellant,


v.
TRANS TERRA CORPORATION INTERNATIONAL, et al.,
Defendants,
Lane & Douglass and Don R. Lane, Defendants-Appellees.
The FIRST NATIONAL BANK OF DURANT, PlaintiffAppellant,
v.
Malcolm C. DOUGLASS, Defendant-Appellee.
Nos. 97-10167, 97-10914.

United States Court of Appeals,


Fifth Circuit.
May 27, 1998.
Rehearing Denied May 14, 1999.

Steven L. Hoard, Julie A. Lawson, Mullin, Hoard and Brown, Amarillo,


TX, for Plaintiff-Appellant.
Robert H. Smith, Smith & Stone, Amarillo, TX, for DefendantsAppellees.
Appeals from the United States District Court for the Northern District of
Texas.
Before REAVLEY, JONES and BENAVIDES, Circuit Judges.
REAVLEY, Circuit Judge:

The principal issue in this diversity case is whether a lender can pursue a
negligence claim against an attorney who, in the course of representing a
borrower, submits an inaccurate title opinion to the lender. Because we hold

that Texas law allows for such a claim under the facts presented, we reverse.
BACKGROUND
2

Tim Epps was the president and owner of Trans Terra Corporation
International (Trans Terra). Trans Terra owned interests in six oil and gas wells
known as the Ledrick wells, located in Roberts County, Texas. Attorney
Malcolm Douglass, of the firm of Lane & Douglass, prepared a lease on the
Ledrick wells for Epps in 1990. In the course of preparing the lease and a 1992
opinion letter, he personally went to the Roberts County courthouse to examine
title records on the wells. Thereafter he prepared numerous title opinions on the
wells purporting to show the ownership interests of Trans Terra. In preparation
of these later opinions he did not examine courthouse records for the documents
affecting the title, but instead relied on information provided to him by Epps
and a landman, Chuck Robinson.

In October of 1993 Epps approached appellant First National Bank in Durant


(the Bank), seeking a $2 million loan to Trans Terra, to be secured by Trans
Terra's interest in the Ledrick wells. In considering the loan request, the Bank
reviewed 1993 title opinions Douglass had prepared for Trans Terra. These title
opinions were addressed to Epps and Trans Terra.

In November of 1993 the Bank agreed to loan Trans Terra $1.5 million,
provided that the Bank receive an updated title opinion addressed to the Bank.
Attorney Ben Munson documented the loan transaction for the Bank by
preparing all of the loan documents except the title report. He prepared a
promissory note and a deed of trust providing a description of the collateral
derived in part from Douglass' title opinions. The property descriptions state
that Trans Terra had a .33 net revenue interest in three of the Ledrick wells and
a .48761 net revenue interest in the other three Ledrick wells.

The loan was set for closing on November 19. On November 18 Munson faxed
Douglass a letter requesting a title opinion on the Ledrick wells that was (1)
"dated within 30 days of November 19, 1993," and (2) addressed to the Bank.
Douglass had no prior notice that he was to prepare such a title opinion. Epps
flew to Oklahoma for the November 19 closing. Bank officers and Munson
attended the closing on behalf of the Bank. Epps did not bring the title opinion
the Bank expected. Epps called Douglass and requested the opinion. This
conversation was made on a speaker phone in the presence of Munson and the
Bank personnel. Epps told Douglass that he had promised the Bank a title
opinion and asked Douglass to prepare it. Munson recalled that Epps told
Douglass he was in the process of closing a loan and needed a title opinion

directed to the Bank as soon as it could be completed. Douglass stated that he


did not have time to prepare the opinion that day. Epps and the Bank agreed to
sign the loan documents with the understanding that the loan would not fund
until the title report was received.
6

On the following Monday, November 22, Douglass forwarded a title opinion to


the Bank. As requested, this title opinion was addressed to the Bank. It states
that the "title opinion is rendered solely and exclusively for your benefit." It
also states that Douglass has "examined the Deed Records of Roberts County,
Texas, from inception of title to the date of this opinion as to the captioned
acreage." In fact, Douglass had not examined records at the courthouse to the
date of the opinion, and had not received any new information from the
landman, Robinson.

Trans Terra defaulted on the loan. The Bank proceeded to foreclose on the
collateral, namely Trans Terra's interests in the Ledrick wells. The November
22 title opinion and earlier title opinions prepared by Douglass were incorrect.
For example, Douglass later wrote the Bank in December of 1994, informing it
that Trans Terra's net revenue interest on the Ledrick 55-1 well was .039375,
versus .33 as represented in the November 22 title opinion, and the net revenue
interest in the Ledrick 55-4 well was .028150, versus .33 as represented. In
preparing the title opinion Douglass failed to discover certain instruments
which caused Trans Terra's interests in the Ledrick wells to be substantially
smaller that those represented in the title opinion. The Bank's expert testified
that Douglass was negligent in preparing the title opinion without having
examined the courthouse records.

The Bank sued Trans Terra, Epps, Douglass, Lane & Douglass, and Douglass'
law partner Don Lane. Trans Terra and Douglass filed for bankruptcy.
Proceedings against Trans Terra and Douglass were severed and
administratively closed. The Bank and Epps later entered into an agreed but
uncollectible judgment. The case proceeded to trial against the law firm and
Lane, based on theories of legal malpractice and negligent misrepresentation on
the part of Douglass. The jury sided with the Bank, finding an attorney-client
relationship between Douglass and the Bank, and negligence on the part of
Douglass. It awarded damages in the amount of the deficiency on the loan.

The district court granted a post-verdict motion for judgment as a matter of law
in favor of defendants Lane and the law firm. It concluded that under Texas law
the Bank was not Douglass' client, and therefore could not recover against these
defendants. Douglass then dismissed his bankruptcy case, notified the district
court that the automatic stay had been terminated, and moved for summary

judgment based on the court's judgment in favor of Lane and the law firm. The
court granted summary judgment in favor of Douglass, consistent with its prior
ruling that the absence of attorney-client privity between the Bank and
Douglass precluded a recovery for the Bank.
10

The Bank appeals the judgment in favor of Lane and the law firm, and the
separate judgment entered in favor of Douglass. Appellees concede that if the
judgment as a matter of law in favor of Lane and the law firm must be reversed,
the summary judgment in favor of Douglass cannot stand.

DISCUSSION
11

A judgment as a matter of law is warranted if the facts and inferences point so


strongly and overwhelmingly in favor of one party that reasonable people could
not arrive at a verdict to the contrary.1 In this diversity case, we must of course
endeavor to decide the case as the Texas Supreme Court would decide it.2

A. Attorney-Client Privity and Negligent Misrepresentation


12
13

The district court concluded that a reasonable jury could not find an attorneyclient relationship between Douglass and the Bank. The Bank argues that there
was sufficient evidence to support such a finding, and alternatively, that the
Bank can recover under a negligent misrepresentation theory irrespective of an
attorney-client relationship. We find merit with the latter argument.

14

Texas law is clear that a legal malpractice claim requires proof of an attorneyclient relationship between the plaintiff and the defendant attorney. In Banc
One Capital Partners Corporation v. Kneipper, we explained:

15 order to establish liability for professional negligence or legal malpractice, the


In
[plaintiffs] must show the existence of a duty owed to them by [the attorney], a
breach of that duty, and damages arising from the breach. Under Texas law, there is
no attorney-client relationship absent a showing of privity of contract, and an
attorney owes no professional duty to a third party or non-client.3
16

This principle was confirmed in Barcelo v. Elliott,4 where the Texas Supreme
Court held that an attorney who negligently drafts a will or trust agreement
owes no duty of care to the beneficiaries of the will or trust. The court noted
that the "potential tort liability to third parties would create a conflict during the
estate planning process, dividing the attorney's loyalty between his or her client
and the third-party beneficiaries."5 It reasoned that "the greater good is served
by preserving a bright-line privity rule which denies a cause of action to all

beneficiaries whom the attorney did not represent. This will ensure that
attorneys may in all cases zealously represent their clients without the threat of
suit from third parties compromising that representation."6 It also expressed
concern that "[w]ithout this 'privity barrier,' the rationale goes, clients would
lose control over the attorney-client relationship, and attorneys would be
subject to almost unlimited liability."7
17

In support of the existence of an attorney-client relationship between Douglass


and the Bank, the Bank points out that the November 22 title opinion was
addressed to the Bank, and states that it "is rendered solely and exclusively for
[the Bank's] benefit." Appellees Douglass, Lane, and Lane & Douglass
(hereinafter the lawyers) point to evidence rebutting the existence of an
attorney-client relationship. The Bank had its own counsel, Munson. Munson's
letter to Douglass requesting the preparation of the title opinion states that "[i]t
is my understanding that you represent Trans Terra Corporation International,"
the borrower. Douglass never billed the Bank for his services, and consistent
with lending practices, the borrower paid all the closing costs, including the
legal fees of Douglass and Munson. Douglass testified that his clients were
Trans Terra and Epps. Further, the title opinion states in its opening sentence
that it was prepared at the request of Epps.

18

We agree with the district court that the lawyers were entitled to judgment as a
matter of law on the legal malpractice claim, because no attorney-client
relationship existed between Douglass and the Bank. The mere fact that the
November 22 letter was addressed to the Bank, or states it was prepared for the
benefit of the Bank, is insufficient to establish an attorney-client relationship. In
Banc One, the opinion letter in issue was addressed to the plaintiff investors,
and stated that it was furnished solely for their benefit, yet we held as a matter
of law that no attorney-client relationship existed between the investors and the
defendant law firm retained by the issuer of the securities purchased by the
plaintiffs.8 Further, the statement in the opinion letter that it was rendered
solely and exclusively for the Bank's benefit must be read in context. The next
sentence states that "[i]t is not a representation of the title to the subject acreage
to any other party." The disclaimer was plainly intended to protect Douglass
from claims of reliance by parties other than the Bank, rather than to manifest
an intention to create an attorney-client relationship.

19

An attorney-client relationship can arise by express agreement or by


implication from the parties' actions.9 However, courts will not readily find an
implied relationship "absent a sufficient showing of intent."10 In Banc One, we
held as a matter of law that neither an expressed nor implied attorney-client
relationship existed based on a single letter addressed to plaintiffs and

purporting to give an opinion solely for their benefit.


20

Likewise, a rational jury could not find an implied attorney-client relationship


in this case based on the November 22 title opinion, where (1) Douglass did not
bill the Bank for his services, (2) the Bank had its own counsel, (3) the Bank's
counsel stated in his November 18 letter his understanding that Douglass
represented Trans Terra, not the Bank, (4) Douglass testified without
qualification that his clients were Epps and Trans Terra, not the Bank, and (5)
the title opinion states that it was prepared at the request of Epps.11 The
attorney-client relationship is contractual in nature.12 Whether the contract is
express or implied, there must be a meeting of the minds that the attorney will
render professional services to the client.13 An "implied" contract merely refers
to the manner of proof; the meeting of the minds is inferred from the conduct
of the parties or the circumstances.14 On these facts, a rational jury could not
infer a meeting of the minds that Douglass would serve as attorney for the
Bank.

21

The Bank argues that the testimony of its attorney expert supports a finding of
an express or implied attorney-client relationship between Douglass and the
Bank. He testified that when a lawyer addresses a title opinion to a lender, the
lawyer is "in effect" representing the Bank. We agree with the lawyers that the
unqualified statement by the expert that the lawyer always represents the
addressee of a title opinion is a legal conclusion that will not support the
verdict, and is further an incorrect statement of the law. The designation of an
addressee in a title opinion letter, without more, does not establish a meeting of
the minds that the author of the title opinion will serve as counsel to the
addressee.

22

Even though an attorney-client relationship did not exist between Douglass and
the Bank, we agree with the Bank that under the facts presented Texas law
allows it a cause of action under a theory of negligent misrepresentation. At the
outset we note that the Bank's complaint asserted separate causes of action for
attorney malpractice and negligent misrepresentation. Likewise, the jury charge
instructed the jury on both legal malpractice and negligent misrepresentation
(the former requiring proof of an attorney-client relationship), and the jury
found liability and damages under both theories.

23

The Texas Supreme Court, in Federal Land Bank Association of Tyler v.


Sloane, 15 adopted the common law cause of action for negligent
misrepresentation as set out in the RESTATEMENT (SECOND) OF TORTS
552 (1977). Under 552:

24 One who, in the course of his business, profession or employment, or in any


(1)
other transaction in which he has a pecuniary interest, supplies false information for
the guidance of others in their business transactions, is subject to liability for
pecuniary loss caused to them by their justifiable reliance upon the information, if
he fails to exercise reasonable care or competence in obtaining or communicating the
information.
25 Except as stated in Subsection (3), the liability stated in Subsection (1) is limited
(2)
to loss suffered
26

(a) by the person or one of a limited group of persons for whose benefit and
guidance he intends to supply the information or knows that the recipient
intends to supply it; and

27

(b) through reliance upon it in a transaction that he intends the information to


influence or knows that the recipient so intends or in a substantially similar
transaction.

28

Sloane expressly agreed with the Restatement's definition, and also set out its
own elements of the negligent misrepresentation cause of action:

29 the representation is made by a defendant in the course of his business, or in a


(1)
transaction in which he has a pecuniary interest; (2) the defendant supplies "false
information" for the guidance of others in their business; (3) the defendant did not
exercise reasonable care or competence in obtaining or communicating the
information; and (4) the plaintiff suffers pecuniary loss by justifiably relying on the
representation.16
30

Under either formulation of the elements of a negligent misrepresentation


claim, the evidence supports a finding of liability against Douglass.

31

The lawyers argue that a negligent misrepresentation cause of action cannot be


asserted against an attorney absent an attorney-client relationship between the
plaintiff and the attorney. In F.E. Appling Interests v. McCamish, Martin,
Brown & Loeffler,17 the Texarkana Court of Appeals recently held that
attorneys are subject to liability under the 552 cause of action for negligent
misrepresentation, whether or not an attorney-client relationship existed. In
Appling, decided after the district court granted the motion for judgment, the
plaintiff sued a savings association, VSA, under a lender liability theory. The
parties worked toward a settlement, but the plaintiff was concerned that the
settlement agreement would not be enforceable if VSA became insolvent and
was taken over by the FSLIC. To complete the settlement, an attorney for the

defendant law firm signed a settlement agreement, stating that VSA and its
counsel represent that the agreement has been approved by the VSA board of
directors and otherwise meets the requirements of 12 U.S.C. 1823(e). Later,
VSA did become insolvent, the FSLIC became the receiver, and a federal court
held that the settlement agreement was unenforceable because it did not
comply with 1823(e). After analyzing Barcelo and other authorities, the court
held that contractual privity between the plaintiff and the defendant attorney is
not required if the elements of a 552 negligent misrepresentation claim are
otherwise met.18
32

The Appling court reasoned that a negligent misrepresentation claim is not


premised on the breach of a duty a professional owes his client or others in
privity, but on an independent duty based on the attorney's manifest awareness
of plaintiff's reliance on the representation and intention that the plaintiff so
rely.19 It noted that its holding did not conflict with Barcelo, since the plaintiffs
in that case "would have no negligent misrepresentation cause of action
because the defendant never made a representation to them."20

33

"[A] decision by an intermediate appellate state court 'is a datum for


ascertaining state law which is not to be disregarded by a federal court unless it
is convinced by other persuasive data that the highest court of the state would
decide otherwise.' "21 Although the lawyers correctly point out that Appling is
in conflict with earlier intermediate state appellate court decisions,22 we are
persuaded that the Texas Supreme Court would agree with Appling. It is the
latest authority from the Texas courts, and in our view is directly on point. The
Texas Supreme Court denied review in Appling. The Appling court had the
benefit of the Texas Supreme Court's decisions in Sloane and Barcelo, the most
recent Texas Supreme Court decisions relevant to the issue presented, and
discussed both cases. We further note that writing contrary to Appling in earlier
Texas cases was not essential to the holdings in those cases.23

34

We also conclude that the Texas Supreme Court's reasons for requiring
attorney-client privity in legal malpractice cases do not compel a privity
requirement in a negligent misrepresentation case such as this one. As
discussed above, Barcelo reasoned that the privity requirement is justified
because: (1) "potential tort liability to third parties would create a conflict
during the estate planning process, dividing the attorney's loyalty between his
or her client and the third-party beneficiaries;"24 (2) the privity requirement
"will ensure that attorneys may in all cases zealously represent their clients
without the threat of suit from third parties compromising that
representation;" 25 and (3) "[w]ithout this 'privity barrier' ... clients would lose
control over the attorney-client relationship, and attorneys would be subject to

almost unlimited liability."26


35

These concerns are not present where the negligent misrepresentation claim is
premised on the facts presented in the pending case. There is no conflict of
interest where, as here, both the client borrower and the third party lender
jointly ask the attorney to prepare an opinion letter. A conflict could only arise
if the client secretly hopes that the title opinion will contain false information,
and we see no reason to protect the attorney from his own negligence with a
privity barrier in such circumstances. We see no burden on zealous
representation when both the lender and client request a discrete service from
the attorney, namely the preparation of a title opinion. Again, barring sinister
motives of the client, both client and lender seek only a accurate title opinion.
Further, where as here the client directs the attorney to prepare a title opinion
for a single lender, and the attorney prepares the opinion disclaiming liability to
any party other than the lender, there is little risk that the client will lose
control over the attorney-client relationship or the attorney will face unlimited
liability.

B. Other Issues
36

The lawyers argue that the evidence does not show that the inaccurate title
opinion was the proximate cause of any injury to the Bank, since the loan
documents were signed before the title opinion was received. The evidence
shows, however, that Epps and the Bank agreed that the loan would not fund,
and indeed it did not fund, until the title opinion was received. The lawyers
argue that the Bank was legally obligated to fund the loan after the loan
documents were signed, whether or not the title opinion was received. A
rational jury could conclude that, regardless of the terms of the loan
documents, Epps understood that no loan proceeds would be forthcoming
without the title opinion, and that he would not have demanded the proceeds
without the title opinion. Further, the loan agreement states that the borrower
agrees to furnish certain defined financial information and "such other
information from time to time as Bank may reasonably request," and the deed
of trust requires Epps to furnish, at any time upon request of the Bank, real
estate documents, including "instruments of further assurance ... and other
documents as may in the sole opinion of the [Bank] be necessary or desirable to
effectuate, complete, perfect, continue or preserve" Trans Terra's loan
obligations.

37

The lawyers argue that the jury was incorrectly instructed that the measure of
damages is "the amount of money paid out by the Bank, minus recoveries had
on the loan." They argue that the correct measure of damages is the difference

between the true value of the collateral and the value of the collateral as
represented in the title opinion. We agree with the district court's instruction. In
Sloane, the court adopted the measure of damages as set out in
RESTATEMENT (SECOND) OF TORTS 552B (1977).
Under 552B:
38 The damages recoverable for a negligent misrepresentation are those necessary
(1)
to compensate the plaintiff for the pecuniary loss to him of which the
misrepresentation is legal cause, including
39

(a) the difference between the value of what he has received in the transaction
and its purchase price or other value given for it; and

40

(b) pecuniary loss suffered otherwise as a consequence of the plaintiff's reliance


upon the misrepresentation.

41 the damages recoverable for a negligent misrepresentation do not include the


(2)
benefit of the plaintiff's contract with the defendant.27
42

The evidence supports a measure of damages equal to the entire amount of the
loan, minus the amounts secured through note payments and foreclosure, since
such a measure reflects the "pecuniary loss suffered otherwise as a consequence
of the plaintiff's reliance upon the misrepresentation." The Bank's president
testified that if the November 22 title opinion had shown Trans Terra's true
interests in the Ledrick wells, the Bank would not have made the loan at all, for
two reasons. First, the Bank would not have made the loan if the interests set
out in the title opinion had been seriously at odds with earlier representations of
Trans Terra's interests. Second, the cash flow expected from the true interests
would not have been sufficient to support the loan.28

43

The lawyers moved for a new trial in the alternative to their motion for
judgment. The district court denied this motion, which was mooted by the
granting of the motion for judgment. The lawyers contend that if we reverse the
judgments, we should hold that they are entitled to a new trial rather that entry
of judgment against them on the jury verdict.

44

The ground for the new trial motion was that the district court allowed the
Bank's expert to testify about the November 22, 1993 title opinion. The lawyers
complain that the expert report produced before trial did not reference that title
opinion as a document the expert had reviewed, as required by FED.R.CIV.P.

26(a).
45

"The admission or exclusion of expert testimony is a matter left to the


discretion of the trial court, and that decision will not be disturbed on appeal
unless it is manifestly erroneous."29 Further, the admission of expert testimony
in violation of Rule 26(a) is subject to harmless error analysis.30

46

The district court did not manifestly err in allowing the expert to testify about
the November 22 title opinion. The expert report indicates that the expert had
reviewed numerous other title opinions Douglass had prepared, which provided
essentially the same opinions contained in the November 22 title opinion. The
expert report goes on to give the opinion that Douglass was negligent "in the
preparation of the oil and gas title opinions" insofar as the opinions represent
that he had reviewed the courthouse records when in fact he had not. The report
assumed that Douglass had not reviewed the courthouse records. The lawyers
knew or should have known that the expert would have the same opinion as to
the November 22 title opinion, whether or not he had reviewed it prior to
preparing the expert report, and that the Bank would ask him about that title
opinion at trial.

47

The judgments below are reversed, and the case is remanded for further
proceedings consistent with this opinion.

48

REVERSED and REMANDED.


EDITH H. JONES, Circuit Judge, dissenting:

49

With due respect to my colleagues' sensitivity to Texas law, and with some
sympathy for the result they reach, I feel I must respectfully dissent from the
portion of the majority opinion discussing negligent misrepresentation under
RESTATEMENT (SECOND) OF TORTS 552.

50

Texas case law is without doubt unclear regarding whether lawyers are liable
for the tort of negligent misrepresentation absent a privity relationship. Two
lines of cases now directly conflict with each other in their statement of the law.
Compare F.E. Appling Interests v. McCamish, Martin, Brown & Loeffler, 953
S.W.2d 405 (Tex.App.--Texarkana 1997, pet. denied) (permitting a negligent
misrepresentation claim against an attorney absent privity) with Thompson v.
Vinson & Elkins, 859 S.W.2d 617, 622-23 (Tex.App.--Houston [1st Dist.]
1993, writ denied); First Mun. Leasing Corp. v. Blankenship, Potts, Aikman,
Hagin & Stewart, 648 S.W.2d 410, 413-14 (Tex.App.--Dallas 1983, writ ref'd

n.r.e.); Bell v. Manning, 613 S.W.2d 335, 338 (Tex.Civ.App.--Tyler 1981, writ
ref'd n.r.e.) (all holding that a negligent misrepresentation claim pursuant to
552 cannot be made absent an attorney-client relationship). Although, as the
majority here notes, the "anti-negligent misrepresentation" cases may be
factually distinguishable such that their holdings could (not must) rest on other
grounds, their statement of the law could not be more clear and forthright--and
contradictory to Appling. The Supreme Court's unfortunate denial of review in
Appling affords no solution to the dilemma.
51

But in a closely related case, the Texas Supreme Court has strictly construed the
privity requirement for a legal malpractice claim wherein third-party
beneficiaries of a trust sue the lawyer and law firm that created the trust. See
Barcelo v. Elliott, 923 S.W.2d 575 (Tex.1996). In doing so, the court rejected
the position of the vast majority of states, which have relaxed the privity barrier
in the estate planning context. See id. at 577-78; see also id. at 579 (Cornyn, J.,
dissenting) ("By refusing to recognize a lawyer's duty to beneficiaries of a will,
the Court embraces a rule recognized by only four states, while simultaneously
rejecting the rule in an overwhelming majority of jurisdictions."). Interestingly,
Appling, the case from which the majority here infer that Texas will extend to
lawyers the potential liability for negligent misrepresentation, relies entirely
upon cases from other states in dispensing with privity. Appling has to
distinguish two contrary Texas appellate cases to reach its conclusion.

52

Judge Reavley's opinion is certainly not wrong, as it reflects a rule many other
states have adopted. The only question is whether the Texas Supreme Court,
having made such a bright-line decision for privity in Barcelo, will cut back on
it to adopt Appling. I do not think these two decisions are easily reconcilable in
principle, in equity, or in fact. Thus, I am wary of making the majority's Erieguess that Appling will become governing Texas law. I respectfully dissent.

Texas Farm Bureau v. United States, 53 F.3d 120, 123 (5th Cir.1995)

Texas Dep't of Housing and Community Affairs v. Verex Assurance, Inc., 68


F.3d 922, 928 (5th Cir.1995); Jackson v. Johns-Manville Sales Corp., 781 F.2d
394, 397-98 (5th Cir.1986) (en banc)

67 F.3d 1187, 1198 (5th Cir.1995) (citations omitted)

923 S.W.2d 575 (Tex.1996)

Id. at 578

6
7
8

Id. at 578-79
Id. at 577
Banc One, 67 F.3d at 1199 & n. 21

Id. at 1198

10

Id

11

Cf. Kotzur v. Kelly, 791 S.W.2d 254, 258 (Tex.App.--Corpus Christi 1990, no
writ) (holding that fact issue precluded summary judgment on issue of implied
attorney-client relationship where attorney admitted that he knew that plaintiffs
did not have a separate attorney, and charged plaintiffs for his services.)

12

Vinson & Elkins v. Moran, 946 S.W.2d 381, 405 (Tex.App.--Houston [14th
Dist.] 1997, writ dism'd by agr.)

13

Id.; Hallmark v. Hand, 885 S.W.2d 471, 476 (Tex.App.--El Paso 1994, writ
denied) (holding that elements of a contract, including element of meeting of
minds, are the same whether the contract is express or implied)

14

Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros. Welding Co., 480
S.W.2d 607, 609 (Tex.1972); Williford v. Submergible Cable Servs., Inc., 895
S.W.2d 379, 384 (Tex.App.--Amarillo 1994, no writ)

15

825 S.W.2d 439, 442 (Tex.1991)

16

Sloane, 825 S.W.2d at 442

17

953 S.W.2d 405 (Tex.App.--Texarkana 1997, writ denied)

18

Id. at 406-08

19

Id. at 408

20

Id. at 409

21

Verex Assurance, 68 F.3d at 928 (citation omitted)

22

Thompson v. Vinson & Elkins, 859 S.W.2d 617, 623 (Tex.App.--Houston [1st
Dist.] 1993, writ denied); First Mun. Leasing Corp. v. Blankenship, Potts,
Aikman, Hagin & Stewart, 648 S.W.2d 410, 413-14 (Tex.App.--Dallas 1983,
writ ref'd n.r.e.); Bell v. Manning, 613 S.W.2d 335, 337-38 (Tex.Civ.App.-Tyler 1981, writ ref'd n.r.e.)

23

While Thompson rejects the application of 522 to lawyers, it is readily


distinguishable from Appling and the pending case because the evidence was
undisputed that the law firm defendant made no representations to the
plaintiffs. 859 S.W.2d at 622. First Municipal Leasing imposed a privity
requirement in a negligent misrepresentation case, but also held that even
absent a privity requirement "the final result in the present case would be the
same.... [T]he non-client First Municipal could not recover for the alleged
negligence because it did not rely upon the opinion of the Attorneys." 648
S.W.2d at 413. Similarly, Bell requires privity between the attorney and the
plaintiff, but indicates that the result would have been the same without a
privity requirement because "we fail to see how the [representation] could be
classified as a negligent representation...." 613 S.W.2d at 339

24

Barcelo, 923 S.W.2d at 578

25

Id. at 578-79

26

Id. at 577

27

Sloane, 825 S.W.2d at 442 (emphasis added)

28

While the jury instruction was correct, we note that testimony regarding the
amount of the Bank's damages does not appear to square with the correct
measure of damages. The Bank's president testified that the Bank recovered
$501,766 at foreclosure, on a loan of $1.5 million. Yet he testified that the
amount still owing on the note was $1,214,260. This figure apparently includes
interest the Bank would have received under the terms of the note. However,
552B, as quoted above, does not allow the plaintiff to recover the benefit of the
plaintiff's contract. Sloane explains that 552B "allows for damages suffered in
reliance upon negligent misrepresentation, but not for the failure to obtain the
benefit of the bargain." 825 S.W.2d at 443. Accordingly, the Bank is only
entitled to recover the amount of principal it originally loaned, minus the
amounts secured through pre-default loan payments and foreclosure, plus any
prejudgment and post-judgment interest Texas law might allow

29

Eiland v. Westinghouse Elec. Corp., 58 F.3d 176, 180 (5th Cir.1995)

30

FED.R.CIV.P. 37(c)(1)